Apple finally launched its highly anticipated AR headset Vision Pro. The reality in which learning becomes a truly immersive experience is closer than ever before.

I am not one to make dramatic announcements, but education in general and our work at Simply will never be the same once Augmented Reality (AR) fulfills its potential.

Apple just released Vision Pro, its first version of what this future will look like, and while the voices surrounding the anticipated technology have been cautious, I want to share why I’m so excited about it and believe it’s about to change everything.

First of all, the initial focus on AR (or mixed reality to be exact) vs. Virtual Reality (VR) is interesting. We would not be the first to consider AR as a potential game changer, while VR as more of a very very cool feature. Interestingly, in its latest announcement, Meta also shared mixed reality capabilities in its flagship VR headset. Apple’s headset, as a strong differentiation, includes hand positioning capabilities, realistic passthrough tech, controllerless experience(!) and gesture control, which make for what seems to be a powerful bridge between the real world and the digital. In a world on the brink of a computer-takes-it-all dystopian landslide, we’re all about these bridges.

Imagine a time when a child can sit with a real guitar at home and as she plays her favorite song, the strings where her fingers are supposed to press light up, guiding her as she learns to read notes, practice chords, pick and strum, and builds confidence.

She can even summon a virtual audience to cheer her on in “Carnegie Hall” or another venue of her liking — all from her familiar living room, playing on her real life actual guitar.

I don’t know about you, but this version of learning and engaging in creativity at home seems like science fiction to me, born of CGI and conjured by the minds of dreamers. But the reality in which learning creative hobbies becomes an immersive experience, in the true sense of the word, is today closer than ever before.

All eyes on Apple

Ahead of the highly anticipated launch of Apple’s mixed reality headset, reporters and industry experts were buzzing with speculation. The metaverse has been a topic of debate and discussion for several years, with different viewpoints and concerns raised. Some have reservations about privacy, security, and the potential for virtual experiences to replace real-world interactions. Others express skepticism about the technological feasibility and ethical implications of a fully realized metaverse. Leading up to the launch, investors were reportedly tuning in to see whether Apple’s entry into the mixed reality market will disrupt, and in some ways revive, the industry and set new standards for immersive technology.

Apple has always successfully combined new hardware and software to create market defining devices, and that’s what many are hoping this new chapter will bring about for the adoption and commodification of mixed reality and AR hardware. Myself included.

In fact, as this extraordinary technology becomes a common thread in our existence, I think we will witness a profound shift. I would like to say that it will impact the device that accompanies us everywhere, our trusty (and beloved!) smartphone, but I don’t think we’re anywhere near our omnipresent companions gracefully taking a step back. Previous attempts failed miserably, as we all know too well. One of their failure points was that wearing these devices out in the open was just plain awkward (and that’s being polite).

Our smartphones won’t be replaced that easily, but maybe, just maybe, when AR matures it could transcend the need for our at-home tablet. This coincides with the types of experiences presented, which were essentially at-home uses, from an immersive workstation, to entertainment and learning.

A realm of endless possibilities

AR has the power to create immersive experiences by overlaying virtual elements onto the real world. It will enable learners to visualize abstract ideas, interact with 3D models, and engage in hands-on simulations, fostering deeper understanding and fathoms of fun. It will enable our learners to stay grounded in their physical reality, while enjoying an immersive experience in the augmented layer added on to it. Being able to dynamically transition between an augmented reality, where we can spend significant time learning and polishing our skills, and a virtual reality (VR), where we can amplify our experience and let our wildest imagination dictate the way, will transform our learning journeys and our creative self expression.

The challenges are immense, as has been covered extensively, but that is true about everything worthwhile. There is no doubt that this technology will in time shrink down in size and price, and these virtual tools will become extensions not only of our imagination but our daily routines. It really isn’t a distant future in which everyone will be able to learn and create with unprecedented freedom and share their vision and personal experiences with others in a capacity far beyond our grasp today.

As someone who is deeply passionate about education, creativity and technology, Apple’s Vision Pro signals a time in which all learning becomes an awe-inspiring adventure, a realm of endless possibilities, and Simply is strongly positioned to lead the way toward this imminent future. It’s not quite there yet, but it’s closer than ever before, as are we…

Yuval Kaminka is Co-Founder and CEO at Simply.

AR is going to change everything for creative skills was originally published in Simply on Medium, where people are continuing the conversation by highlighting and responding to this story.

JoyTunes is enjoying massive growth, with business growth exceeding the pace of team and company building. Expanding the team and the company are good challenges to have, but challenges nonetheless. To continue growing rapidly, we have to be especially mindful about how to do it right so that we can become a truly spectacular company; one that creates wonderful music learning services for all and that can move very fast.

tl;dr we implemented an extreme startup within a startup structure, called pods, to maximize impact velocity and reduce the risk of becoming mediocre. This structure offers many benefits while presenting quite a few challenges. We like it.

JoyTunes is creating a music learning companion for every household. Our service, situated on the crossroads of music, lifestyle, education and consumer subscription, is quite unique. More importantly, we’re trying to build something really, really big. Our growth strategy is all about building an amazingly impactful and fast moving company, even when we’re much larger in size, or rather, especially when we’re much larger in size. This lends itself to a somewhat different structure and process, as seen in some lessons we describe here. But first, what problems are we trying to solve?

Maximizing Impact Velocity

In the past, at JoyTunes and in other companies, many of us have often experienced the frustration of feeling sluggish, as if everything in the company was moving annoyingly slowly. Every feature and/or decision required an endless cycle of approvals, jumping up and down the hierarchical pyramid along with countless meetings (sprinkled with some fun office politics, gotta love those) that were missing context and a clear goal.

These are just some of the issues we were so concerned with when scaling the company. There are many others.

It is not uncommon to hear CEOs of companies with over 200 employees say things like, “how I miss it when we were 40 people, we could really move fast back then.” Some mention specifically the law of diminishing returns, meaning that employee #231 doesn’t add nearly as much impact as, say, employee #28. Moreover, for some companies, adding more people actually reduces their throughput: aka negative returns.

This outcome of diminishing returns is quite understandable. When you’re a team of 15, you focus only on what matters most to get by. As you grow, you start adding processes, departments, supporting disciplines, managers, managers of managers, IT for managers of managers, etc. As we scaled at JoyTunes, this phenomenon really troubled us. So, somewhat naively, we decided to challenge the common wisdom. We declared war on diminishing returns.

Pods Perspective 1: declaring war on diminishing returns

Edge of a Cliff

Reflecting on JoyTunes’ history, we started by pinpointing when we ‘crushed it’ and when things were quite bad. An (extreme) example of this happened just after downsizing our already small team. The resulting core team, while 30% smaller, moved much faster than before and achieved incredible(!) impact.

More recently, our 300%+ growth in revenue+users in the past year was fueled largely by a series of cliffs that our very small team had to tackle and overcome. I can’t stress this enough, the team has been unbelievable in doing the unimaginable.

Sparing you the gory details, a combination of a few principles can be identified that distinguished JoyTunes’ extreme good times from, well, not-as-good times:

1. Focus, or, rather, a strong sense of “to be or not to be”
2. Lots of passion
3. Intense teamwork and ownership
4. Doing whatever is needed, no ego

This list isn’t that surprising, I imagine. Interestingly though, these so called ‘good times’ were in reality quite bad in the more realistic sense. We were experiencing an existential threat; in other words, we were about to die.

Looking back, when we reached the edge of a cliff and we needed something to happen no matter what, we made it happen. It’s as simple as that. But as we grew, we noticed that spark starting to fade. Going into a culture/org frenzy, we started exploring what’s out there. We considered a lot of structures, like traditional departments, product teams, holacracy, and, of course, Spotify’s squads.

With all these references in mind, we came to a rather simple conclusion: let’s just (sort of) keep doing what we do now. Basically, and not for the first time, we went from our gut-feeling in the beginning, moved through an extensive research phase, only to end up in a place similar to our starting point. The difference is that now we’re equipped with guiding principles and a whole lot of confidence.

Pods in a Nutshell

The pods are small, focused startups, composed of roughly four to ten strong and resourceful people sharing a clear goal and lots of ownership. Pod members ideally possess all the disciplines and resources needed to make a (mind-bending) dent, and have the ownership needed to do whatever it takes to get it done. They must be able to move fast, make smart (and hard) decisions, work closely with each other and deliver loads of impact and value to our many users.

For example, a pod responsible for usage in the app currently includes senior developers, a development lead, a product lead, musicians (yeah!), marketing leads, a data guru and a product designer. In revenue/impact terms, the relative impact, or rather the specific weight of each pod member is higher than that of our team members when we were much smaller — a small (work in progress) win over diminishing returns.

The core principles we defined internally:

1. Smallish, limited resources — forces everyone to make difficult decisions all the time. There’s no ‘cream’, everyone is super important.
2. Hands on, do whatever is needed, no ego.
3. Focus! Every pod has a goal on which to focus, and, more importantly, a list of all the things they’re NOT working on.
4. Ownership, independence — in pursuing its goal, the pod owns its own fate. There are no top-down plans forced on the team. The pod decides on a plan for achieving their goals and executes it accordingly.

Pods Perspective 2: small startups within a startup

Guilds as a Crucial Complementary Element

To complement the pods, we started to define our professional guilds. This approach is not unique to JoyTunes, but it’s important to highlight the guilds as a crucial part of the pod structure, enabling its growing scale.

Generally speaking, the guilds are responsible for advancing the professional level in the company. They set a super high bar for hiring, and offer continuous training, syncs among members of different pods, mutual learning opportunities, etc.

The guilds offer an alternative view of the pod system. In the now common matrix management structure, all iOS devs, for example, sit together in a team, all designers are in a team, etc., and a business owner / product manager syncs with relevant people across teams. The primary dimension is therefore who you sit with, which takes up most of your attention and time, while the secondary dimension of this management matrix is the business challenge/goal.

In the pod system, we flip the primary and secondary dimensions of the matrix (aka transpose), having all team members that sit together work on a strategic goal of the company, whether they are developers, designers, marketing, business development, etc., and the professional guilds become the complementary second dimension.

Pod Perspective 3: transpose (management_matrix)

As an example, the dev guild at JoyTunes is all about learning new tools, code review, training sessions, dev conferences, deciding on dev issues across the company, talks, syncing release cycles, etc.

Does this scale?

The short answer is yes. The ability, or lack thereof, to scale the small startup mentality was the main reason for insecurity when moving in this direction. This was the issue we explored the most. What we learned from other companies, like Spotify and Netflix, is that, basically, such scaling can be done, but that it requires additional guidelines and adaptations which we implemented immediately. I will cover these in a separate post.

Training

As with other small startups, people are expected to learn on the job, and quickly. While this creates a high bar for hiring in general (described below), it also means that the pods must be structured in a way that there needs to be a mentoring mechanism for decision making, product-market fit, leadership, and even getting-shit-done attitude. We used to throw people off the deep end, only to see some drown miserably. Throwing in some floaties helped, but lacking swimming guidance, 4 out of 5 people will continue to float around after a year. Floating means being stagnant, and for what we’re trying to build, being stagnant means, well, the end of life, universe and everything.

Pods Perspective 4: a crash course in startup building

Known Bugs (Features?)

We discovered quite a few challenges while working this way. Some were tagged under ‘known issues’ while others were flagged to be mitigated (work in progress). Here’s a selection of some bugs:

1. Blind Spots — gaps between pods aren’t covered using this approach. While this can be mitigated, it’s more of a feature than a bug.
2. Very(!) high bar for hiring — the impact of each person joining is equal to or even greater than that of an early employee in a small startup. This means we require strong thinkers who enjoy having a strong impact on the product and the users’ experience.
3. Doesn’t work that well with occasional/part-time work. Creative solutions are needed to address this issue.

Pods are the Best Thing Ever Invented

No, they are not. In fact, they are not even a sufficient nor necessary structure for attaining amazing velocity. But we found them to be very (!) helpful in optimizing what we care about most, while dealing with disadvantages, as discussed above. As an agile coach from Spotify once told us, “All structures are bad by definition. You need to choose what’s really important for you and optimize for that.”

We optimized on our impact velocity and that has proved itself effective time and again. Still, we keep reminding ourselves about what matters: impact velocity, and not processes or “rules”, even those relating to our beloved pods.

Also, work in progress….. yada yada yada.

This blog post was written in light of a talk I gave to Aleph portfolio founders, Product and R&D leads, on the topic of Working in Squads

Scaling the Small-Startup-Get-Things-Done Mentality @ JoyTunes was originally published in Aleph on Medium, where people are continuing the conversation by highlighting and responding to this story.

TL;DR an experimental pricing scheme for global sales increased our music learning revenue at Simply by 15%. Yes, it was based on Big Macs.

“You know what made us the biggest, meanest, Big Mac eating, calorie-counting, world-dominating kick-ass powerhouse country in the history of the human race? The pursuit of happiness. Not happiness. The pursuit.”

— Will Ferguson

Quick Background

Our ambitious mission at Simply is to make it easy, fun and affordable to learn to play any musical instrument. Currently, our super fun and engaging piano learning apps are seeing massive growth, due in no small part to our numerous product improvements and tests.

Here, I focus on one such test, specifically for pricing our memberships. The motivation came from a boost in sales that we’ve seen with our China users when we hit the magical 50% discount.

Big in China

Our piano learning apps have always gained a lot of quality users in China, but the conversion to memberships was much lower than in the US, which was frustrating. We knew things were generally cheaper in China and had some ideas for the right pricing. And so, we figured we could try to gradually lower the prices and see what happens.

Lo and behold, as the price went down, the conversion went up. So far so good. But the conversion increase wasn’t enough to compensate for the reduced price.

Let’s see what this means. In broad strokes, the revenue is the multiplication of the number of users, the conversion and the price —

Rev = N_Users × Conversion × Price

If we lower the price by 25%, for example, then we’ll have a new conversion and therefore new revenue (we’ll safely assume the number of users remains the same) —

Rev_2 = N_Users × Conversion_2 × Price × 0.75

If we want the revenue to increase, meaning Rev_2 > Rev, then it turns out in the example above that Conversion_2 needs to be at least 33% higher than the initial conversion. Anything below means you’re losing money. Which is exactly what happened to us, that is, until we hit that magical 50% discount.

Remember, according to the equations above, or just plain logic, we need to double the purchases (meaning double the conversion) to compensate for cutting the price by half, but we more than doubled. Way more.

Yada Yada Yada, we’re doing a geographical pricing test…

Big Mac Pricing Scheme

The China success led to the desire of finding a pricing optimum for our long-tail downloads outside the US and China, that account for roughly 40% of our users. As in many cases, we had to hack our way through this as we don’t have the capacity to carefully price each country separately. Besides, most countries would need an abundance of time to accumulate enough data for a reasonable outcome (more on that in a separate post). And so, we used the geographical bulk pricing options to create an overall scheme.

In short, we bulk-adjusted the membership prices according to the Big Mac Index.

The Big Mac Index

The Big Mac Index is a surprisingly insightful pseudo financial index created by the Economist. The index uses McDonald’s Big Mac prices around the world to compare and measure currency ‘strength’. At its core, the index is basically just a list of Big Mac prices in over 50 countries as compared to the US prices. Interestingly, it’s helpful in figuring out the relative purchasing power when it comes to mainstream commodities, that is, assuming McDonald’s have been doing their homework (and they have!).

As our mission is to make it possible for everyone to learn an instrument, and as iOS subscriptions are still fairly new, we wanted to make sure we fit mainstream prices.

“A Big Mac — the communion wafer of consumption.”
 — John Ralston Saul

The Pricing Scheme

1. Iteration I: We adjusted all the prices according to the Big Mac Index, meaning, using US prices as a base, we decreased or increased (mostly decreased) the membership prices based on what the Big Mac index was for that country. We did this for 60 countries.
   (See below an example spreadsheet)
2. Sanity: Interestingly, this method led to the pricing we manually found to be the best for China. A quick sanity for some other countries showed quite reasonable pricing. At this point we couldn’t keep still due to overwhelming anticipation.
3. Iteration II: Taking the result of #1, we applied cosmetic changes for the local currency. For example, a price of 10.99 euros was changed to 9.99 etc.

Use the spreadsheet below to play around with the price adjustments. We used a similar one in our work.

JoyTunes BigMac Pricing Playground

Important Notes:

1. The Big Mac index changes from time to time, the one in the sheet is from late 2016.
2. Not all countries appear in the index. For those that don’t you can set a default adjustment. Since these accounted for a negligible share of sales we just kept it at 100% of the US price.
3. Some prices are not in USD. I adjusted from USD to the local currency using a currency conversion that is relevant for late 2016. This changes from time to time.

Results

The worldwide revenue increased by 15%!!!
(yes, it was statistically significant)

Not bad for a day’s work :)

Alternative Approaches

-or- even better ideas!

There are obviously many alternatives to our choice of global pricing. These are just a few that come to mind —

• Unified Pricing — iPads and iPhones cost roughly the same worldwide (up to varying taxes), why should memberships be any different? Moreover, affording an iPhone might make one less sensitive to a-few-dollars-per-month difference in education services(?)
• Use some other scheme — For example, adjusting the membership prices to piano lesson prices worldwide. We played around with this notion, also using askwonder for a sample of lesson prices in key countries
• Individual testing — As with China, there could be other magical singularity pricing points for different countries and cultures. It would be interesting to explore, or better yet, automate the process of optimizing the price over time

Epilogue

We run hundreds of tests of various shapes and sizes, which has led to 10x revenue growth over the past year and many more satisfied piano learners. This was but one of these tests — we hope it was helpful.

“I am the literary equivalent of a Big Mac and fries.”
 — Stephen King

How Big Macs Increased Our Revenue by 15% was originally published in Simply on Medium, where people are continuing the conversation by highlighting and responding to this story.

EDIT (July 16 2017): Apple released the features described here! Relevant links appear at the bottom.

Continuing what might gradually become a mild obsession with subscriptions, I had the great privilege of attending Apple’s main event and exploring all the shiny new things coming up for subscriptions.

As should be already well known, this past year has seen dramatic announcements and growth for subscription services in the App Store. It started with opening up subscriptions to all categories and the dramatic Apple royalty cut for 2nd year subscribers, and continued throughout the year with an abundance of feature releases, such as geographical pricing, new free trial options and durations, subscription event reports and more.

For the most part, these moves served as enablers, allowing and encouraging many devs to shift to the new model, and rightfully so. But as these appetizers were served, we all became increasingly hungry for more. In fact, our team at Simply has carefully collected a bunch of stats and actionable insights for the next steps. Luckily, the amazing subscription teams at Apple had similar notions, which brings us to WWDC17.

So, what happened at WWDC17?

tl;dr Apple decided to double down on reducing churn, including involuntary cancellations, voluntary cancellations, and refunds.
(churn = rate of losing paying subscribers)

Below are the main changes that our team at Simply found to be the most exciting, followed by some explanations on the importance of these changes and real life stats.

• Extending billing retry window from several hours to (up to) 60 days
• Real-time server events sent from Apple for special cases, like user downgrades, refunds, and renewal of an expired subscription (after a billing issue for example) — important for cross-platform services
• Flagging billing issues, auto-renewal cancellations, refunds and even refund reasons (from AppleCare) as they happen, per user(!!!)
• For refunds this is especially awesome as there was no information associated with refunds before

It’s a little embarrassing, but these changes actually brought tears of joy to my eyes. To understand why, let’s look at the changes in a bit more depth.

Involuntary Churn

Let’s start with involuntary churn, aka Billing Issues. These are cancellations due to expired credit cards, not enough store credits, stolen cards and any other difficulties Apple encounters when charging money for the renewal.

I’m guessing this sounds incredibly minor, god knows we thought so too. That is, until we checked the cancellation reasons in the fairly new and amazingly hidden Subscription Events Report (ITC → Sales & Trends → Reports from drop down → Download subscription reports) and found that a whopping 22% of cancellations happen due to this reason.

Coming into WWDC17, we had the following questions -

1. Is 22% considered standard?
2. If not, wtf?! What are we doing wrong??
3. If so, wtf?! Can Apple help solve this?

The first discovery was that 22% is actually frighteningly standard, which was reassuring in a sense — at least it’s not just us! Moreover, billing issues are considered the #3 cancellation reason in general.

Today, when billing issues occur, Apple tries to get the user to fix these within a few hours. Not such a generous time frame if your card has been stolen for example, or if you’re just a lazy passive person like the rest of us. This has now been extended to up to 60 days(!!!), depending on the issues found.

My guess is that this change could singlehandedly result in an oh-so-sweet increase in overall subscription revenue across the board.

In addition, Apple added new fields to the receipt data for signaling billing issues so that we, the app developers, can warn users about the situation, move them to temporary access or any other solution.

To top it off, there will soon be server notifications from Apple for several special cases. Among them, flagging that a billing issue has been resolved so that the membership can be renewed. This is important for cross-platform services where a user might try to access the website, for example, without opening the app first, so we won’t know the billing issue was solved. In other words, Apple is serious about its responsibility as a payment method for subscriptions that can go beyond apps.

It should be noted that the server notifications are super important, especially as we have an increasing number of subscriptions adding up every day and it’s becoming challenging to retrieve up to date information for all of them, all the time.

Voluntary Churn

This category includes the regular reasons why anyone would want to cancel the auto-renewal of a service, one of which being old-fashioned fear. In fact, our data showed that over 20% of cancellations of the auto-renewal in annual plans happen in the first few days (see graph). Basically, people wanted the service, but just wanted to make sure it doesn’t renew before even using it.

While there are quite a few things we can do to increase users’ confidence in our high quality music-learning service, so far there was no way to know if we were improving things because we saw these anonymous cancellations only after the subscription expired. In more practical terms, we need to wait a whole freakin’ year to know if our efforts had an impact…

Well, Apple changed that. A new field will be added to the receipt with the status of the renewal. This has two huge benefits, both knowing immediately that a cancellation occurred, and also knowing who cancelled. Apple went even further and also added information on plan duration changes, upgrades/downgrades and consent (or lack thereof) to a price increase. The full details can be found in the Advanced StoreKit session from WWDC17.

Refunds

As a special and more extreme case of cancellations, there was extra attention to refunds. Unfortunately, like in all businesses, refund requests do happen. Today, we are just passively aware of them, keeping an eye out that there aren’t too many. But we don’t know who asked for a refund and we don’t know why. This too is changing — even more fields in the receipt will allow to see refunds as they occur, who asked for them, and even the reason that was mentioned to AppleCare when a refund was requested.

This allows, for example, studying if some configurations / languages / countries are asking for refunds more than others. Maybe we’re doing something wrong? The reason supplied to Apple Care can also shed a lot of information so we can improve our products.

I can’t stress enough how dramatic this is as a support asset. For the first time, we can write these users, talk to them, understand what happened, offer some additional compensation, god willing even win them back.

Playing with some numbers

Let’s play with some churn numbers, just for fun. Let’s say you have a relatively high, yet surprisingly common, 40% churn for the first month, then 10% month-over-month churn, of which 25% is billing issues. If the billing issues are cut to 10%, we’re at 34% first month churn and 8.5% month-over-month. Not a big deal right? Well, let’s say you have 1,000 subscribers starting out for each option. In the original churn, you’ll have only 188 left after a year, or 244 in the new one. Both are far from ideal, but this still means a 32% increase. Better yet, it’s 32% more subscribers that now reached the 2nd year with the increased revenue from Apple.

Timing

When is all this happening? The formal answer supplied was that all the changes will be released together “by the end of the year”, and in no special relation to the upcoming iOS11 release. This implies ±November. I have high hopes for much sooner and will put my bet on August. I can promise I will not sleep well until these new updates are out!

EDIT (July 16 2017): It’s OUT!
See Apple’s developer subscription guide and a full list of receipt fields (including the new ones). Exciting times indeed!

I hope this short post helps explain why these changes are so dramatic, and well worth the loud round of applause and involuntary yays from the audience at WWDC17 (including me!). Thanks Yoni, Genady, Oded, Nadia, Lior, Lital and Amitay for all the help!

Ping me with any comments/questions.

WWDC 2017: Amazing new features for subscriptions was originally published in Simply on Medium, where people are continuing the conversation by highlighting and responding to this story.

This is the third (and last?) part of my random subscription thoughts, which summarizes recent dramatic changes in mobile subscription and my own humble opinion of why this is freakin’ HUGE. The first two parts cover challenges in mobile app subscriptions and tips to get it right.

*Disclaimer: While I did spend quite a bit of time studying this, everything here, including the facts, is just my opinion.

A New Model in Town

In June 2016, the floor shook in our cozy Simply office. Well, it didn’t physically move but it might have for all I knew as I was trembling with the news on Apple’s revenue cut change for subscriptions.

In short, Apple’s SVP of Marketing, Phil Schiller, announced that they would drop the regular revenue cut from 30% to 15% from the second year for a given subscriber. Within hours, a strong aftershock was felt as Google announced a similar cut but from day one of a subscriber’s membership. To top it off, Apple declared it will be opening up the subscription model to all app categories and not only content-based apps. EARTHQUAKE

I’ll leave it to the conspiracy lovers to concoct what exactly got Phil to uncharacteristically make this announcement a week before Apple’s grand developer conference WWDC, and Google to make a very similar announcement within hours (though I do have my own fun thoughts), and focus instead on the magnitude of this change.

No, I’m not talking about the revenue change at all. Growing from getting 70% of the revenue to 85% means a growth rate of 21%, which is really sweet, but it’s probably not a game changer for most companies by itself. I believe the bigger thing here is the statement that both giants are sending — No more ads-based short-lived crappy apps!

Wait, if this happened months ago, why is this relevant now?

That’s an excellent question. After iOS10 rolled out recently with its magnificent changes to subscription management and features (some details at the bottom), we became convinced previous announcements were not cosmetic ones but actual strategic changes.

Better Apps, Better Mobile Companies

The App Stores need to mature at some point. Mobile developers know how amazingly hard it is to build a big viable business based on micro payments especially when expectations are going up. Right now most of the successes belong to the companies that build tools (like in a classic gold rush), and your occasional gaming company that has cracked open the whale economy, meaning they have found a way to get some customers to pay a ridiculous amount of money (in the thousands of dollars, aka whales) for their drug-level addicting games. Other than that, it’s mostly indie devs that often can’t afford to go beyond mediocre experiences, or startups that can but at the expense of losing lots and lots of investor $$.

In the beginning this worked fine with tens of thousands of flashlight apps, crappy games, fart-sound apps, etc., but people are now looking for better experiences and more value, for the same $0.99 (at most!) that they used to pay before. Arguably this is even more evident in the Play Store where it is known few people pay which leads to low quality ads-filled apps with very shallow experiences that discourage people from buying, and so on.

As an example, it was a shocking finding that a very well known paid app which is heavily promoted by Apple and spending a shitload on ads is making somewhere in the $10M range per year. Now, this might sound like a lot, but this app has achieved the holy-grail of store attention and built a sizable acquisition machine. One would expect it to be a huge juggernaut when instead its revenue isn’t particularly interesting in the investment world. Is that all that we can hope for? That’s our role model company?

In essence, there isn’t really a middle class of app companies that have great millions-of-dollars-per-month businesses. There are the huge players, and a very long tail. Consider this, the Apple App Store generated $20B in revenue in 2015 (70% of it going to devs), with your current ‘big players’ (Candy Crush, Clash of Clans, etc.) responsible for a good chunk of that. This implies a quickly diminishing power graph with only the top companies making real revenue. You only need several thousands of dollars a day to be in the 500 top grossing in the US, which says a lot.

To demonstrate this, illustrated below is the daily revenue of one of the Simply apps from some time ago as a function of the rank in the Top Grossing Education in the US. The plot and its fitted curve show the extent of the drop in revenue —few companies make money, followed by a very long tail.

Apple and Google have decided to push developers into creating greater value by rewarding them with more profit, which is nothing short of a paradigm shift, or at least an attempt to create such a shift. Just consider how dramatic it is for companies like Apple and Google to make such a big pricing change in the holy domain of the App Store.

The acquisition costs through various paid channels and the average revenue per user (ARPU) are at a balance today that doesn’t allow much room for change. By opening the lucrative subscription model to all app categories and adding more revenue down the line for retained users, this will (should?) encourage many companies, probably mostly in non-game categories, to create meaningful lasting experiences with a much greater ARPU over time. This in turn means more valuable apps → more usage, more device sales, more app store revenue over time.

Final Words

It’s exciting to see if this paradigm shift actually succeeds in increasing ARPU of users while creating better, healthier and more viable app ecosystems. All of us at Simply are thrilled about this and can’t wait to see what else will be rolling out.

See also — Part I with the special challenges of mobile app subscriptions and Part II for tips and tools to get it right.

Mobile App Subscriptions Are Going To Change Everything(?) was originally published in Simply on Medium, where people are continuing the conversation by highlighting and responding to this story.

After Part I described the challenges of mobile app subscriptions, and just before we go into the big market changes in Part III, it’s time for a few insights we learned at Simply for making mobile app subscriptions work.

We’ll start with launching a new app with a subscription model and then add a few highlights for the special case of moving to subscription from an existing free/paid/in-app based model.

Selling subscriptions in a new app

Below are a few principles that hopefully will be useful when considering integrating a subscription model in your app. There are more, obviously, but I think these are the main ones (let me know if I forgot a key ingredient).

• Make sure your app is fit for subscription
  Don’t get blinded by the reduced revenue cut by the stores or the apparent buzz over the increased life time value. In many cases a freemium/paid app could work much better and have much higher conversion rates (see calculations below). Do you have ongoing value to users that is perceived to have clear money value? Are competitive solutions, even if inferior, charging their users? What price points would you imagine users spending on an ongoing basis? Be truthful with yourself.
• Do the math
  Your revenue is the number of new users multiplied by the conversion rate and the Life Time Value (LTV) of a paying user. Your LTV in turn is determined by the price and the duration a user is retained. It’s hard to guess these numbers in advance but you can at least make educated guesses that you can then validate.
  The oversimplified (yet surprisingly powerful) calculation below includes some assumptions for an average user in a freemium app with a standard $2.99 one time in-app payment vs. a $1.99/month subscription (with a not great yet non-trivial-for-consumer-services average of 3 months retention) and a paid app. With the numbers below, the subscription is actually inferior to the others (as it also requires much more work…). The results will vary wildly of course based on the duration you think customers will stick around for, and, well, everything else :)

• Demonstrate ongoing value
  Users need to be utterly convinced you have plenty of value to supply them on an ongoing basis. At Simply we have our ongoing flow of piano courses, but for some apps/games it might be trickier. As an example, we saw great impact when adding “coming soon” courses that mirrored our content plan and made a very clear point that new content will be added all the time.
  If in doubt, you can try to add a free trial in the beginning. This will bring the burden of proof on yourself which could go a long way in convincing users of the longevity of your service.
• Build trust
  Your users will really need to trust your app to approve such a difficult pricing model. It can be with social proof (awards, reviews, press recognition), high standards of design, sleek experience, explanations on how to cancel, amazing App Store presence (screenshots, description, icon), great customer support etc. You won’t necessarily need it all right away (or at all), just whatever it takes to build that elusive trust. For example, at some point we added the screen below to the purchase process in our Simply Piano app. This single change made a 10% difference in conversion rates, and over 20% when paired with other purchase flow changes. That’s another point about trust — sometimes it’s a single screen, testimonial or seal, but in other cases it will be a combination of factors that strengthen a key message.

• Know your tools
  There are many options and features available from both Apple and Google that can really help introducing and maintaining subscriptions, including trials, promotional prices, subscription tiers and more. Some of these are described at the end of this post.

Selling subscriptions in a previously paid/free app

This is especially relevant now as subscriptions become available to all categories and more developers want to migrate to the shiny new model. First of all, all the principles of the previous section fully apply of course with a very strong emphasis: Sensitivity.

Your customers are used to an experience in your app and you are going to flip them upside down. Even worse, they won’t get why you need to add a weird subscription to a mobile app and have no idea how it works (remember the ‘ugly’ description from Part I??).

My advice to you is — don’t.

If at all possible, try to start the new model on new users and leave the old ones for now. If that’s not an option, either because of technical details or otherwise, do it with a lot of transparency, sensitivity and respect. Try to sugar coat it, give more benefits, explain the move, offer a discount, set a transition phase etc.

You’ll need to convince them of the ongoing value even more. True, they already know and love your app, but they were used to a different payment model. For one thing, you can explain that a subscription means your interests are aligned when it comes to ongoing value. With a paid app you don’t necessarily care so much what happens 3 months in…

It is also good practice to bombard the transition with added benefits and value. Put your dev work where your mouth is and show how much the experience is going to improve over time. This is key to a smooth transition.

Possibly useful technical details

• Apple’s new revenue calculation (Part III) works as follows — Apple’s cut is the standard 30% for the first year, and then 15% from the first renewal that is at least one day into the second year. For example, the second renewal of a yearly plan. This makes a lot of sense, but also creates some fun quirks, like if your user was a monthly subscriber for 10 months and then opted in to the yearly plan, you will still get only 70% (and not 85%) for that yearly plan. Google’s revenue cut was similarly modified but starting from day one of a subscription.
• Apple has also rolled out a bunch of subscription management changes with iOS10 which are totally worth your time, that is, if you’re in the app subscription business. Among other things, these include the ability to define tiers (like silver-gold-platinum) and have users upgrade/downgrade.
• Another cool change that Apple added is the introduction of geo-pricing which we have found to be very useful (to be described in a later post).
• Google announced they will be rolling out promotional prices for subscriptions, for example, offering a plan for $0.99/month for the first few months. Cool stuff.

So much for tips. Check out Part I to understand the special challenges of mobile app subscriptions, or Part III for industry trends.

4 Tips To Succeed With Mobile App Subscriptions was originally published in Simply on Medium, where people are continuing the conversation by highlighting and responding to this story.

For easy navigation, I separated my random subscription insights into three. This first part gives a taste of the many challenges of mobile app subscriptions which we’ll try to overcome with tips in the second part. The third part is about why recent dramatic changes in mobile app subscriptions might change everything.

The insights are based on our experience at Simply, creating the top piano learning app and service. I’m hoping this will be relevant these days as a new wave of apps are adding the subscription model (the reason for that is covered in Part III), sadly some of which are becoming the target of not-exactly-flattering remarks because of it (not mentioning any names…).

The Bad

Well, the bad is pretty straightforward. People don’t like subscriptions. We’re all very cautious with ongoing payments that are easy to forget and can amount to a ridiculous sum over time. That’s common to all subscription services and important to remember when considering this model.

The Ugly

Subscriptions are feared in general. Sadly, the fear of subscriptions is an order of magnitude worse on mobile.

Why is that? Well, for one thing users are used to free, or almost free, amazing experiences. Heck, you practically expect a $5 app to project holograms and never have any apparent issue otherwise you’ll give it a 1-star-I-can’t-believe-I-paid-for-this-shitty-app review to warn others.

Moreover, people are suspicious of mobile subscriptions because it’s not clear how they work. In fact, we defined a category of support tickets of users asking to cancel “just to know how” and have many others that just don’t understand the device subscription management. This also means you have fewer “forgetful” subscribers because the users are very aware of the price they pay and when the renewal happens.

Another angle to the unfamiliarity of mobile app subscriptions is that developers don’t understand it that much as well. More importantly, while the tools and management options are getting better, they’re still hugely inferior to those available in web services. Basically, at least in Apple’s case, the subscriptions are managed by Apple. This simplifies things but also takes away the control. For example, you don’t know when someone canceled until the end of the subscription duration.

Last, apps are considered as “nuggets” of content/usage, even when that’s not the case. Users often think of apps as having a small, well defined and contained value which is contradictory to the ongoing subscription model. This latter point is probably not that different from the difficulty of moving customers from paid software to SAAS some years back.

Finally, The Good

So much for the ugly sides. Where’s the good you ask? The good part is the trend. The mobile subscriptions offered by Spotify, Apple Music, Netflix and some other giants are a great start in market education but they’re not enough by themselves. With recent announcements made by Apple and Google (see Part III), more and more devs are rolling out subscription services. This trend, along with subscription management improvements being made, will hopefully go a long way in reducing the levels of dramatic fear to a more manageable level of healthy general caution that is common in web-based services.

A working subscription model often means great returns in average revenue per user (ARPU) which is too often meager in the micro-payments ecosystem of the mobile app stores. It also means a commitment to create long lasting value to users. Clearly a win-win if you can only make it work…

So how do you go about adding subscriptions to your great app? See Part II for useful tips, or Part III to get a glimpse into recent industry changes.

The Good, the Bad and the Ugly in Mobile App Subscriptions was originally published in Simply on Medium, where people are continuing the conversation by highlighting and responding to this story.

Following positive feedback on our post about Simply’ successful launch on Product Hunt, I thought we could possibly share some more of our ongoing experiences in a growing startup. Here, I’ll discuss our decision to introduce a semi-formal performance review process in our company.

I enjoy corporate bureaucracy like any average guy (…), so for me, 360 meetings, performance meetings and basically any other form of procedural formal process for timely feedback was an overkill at our lean, smart, somewhat cynical, 19-people startup, Simply.

But that recently changed.

Why did Simply decide to incorporate a performance process?

I had no intention of introducing a formal feedback process at our size and stage. All in due time, I kept saying. Besides, we have weekly meetings and such where feedback is openly given on an ongoing basis. But then a combination of things changed my mind:

1. Two team members, whom I meet regularly, expressed their frustration about “not knowing how they were doing”. This surprised me, of course, since we talk all the time
2. Some time ago, we parted ways with an employee that expressed a similar sentiment to the point that he was outright surprised we weren’t happy with his/her performance despite talking about this in one-on-ones, probably too implicitly. *Fail*
3. I recently finished reading The Hard Thing About Hard Things by Ben Horowitz. Ben’s discussion over management debt struck close to home. In fact, if my memory serves me well, Ben’s leading example of management debt was running fast and neglecting performance meetings in a startup of ~20 people. Reading this closed the deal for me and we decided internally that we were going for it

Who is this for?

What I mention here might fit small companies of ~20 people that have been around for at least 1–2 years. In these companies team retention and mechanisms to help issues surface tend to be very relevant, at least in my experience. If you opened your company 6 months ago and already have a team of 25, you probably need a different process or none at all at this point.

Goals & Impact

The main goal is to strengthen the organization together by discovering issues and getting everyone to work better and be happier in what they do, including me.

Our day to day is super packed, and so while it might seem that we look closely at our work and our team members, it’s surprising how much we actually miss. So, first and foremost, we’re doing this to optimize the following:

1. Increase # of days where people return home and say it was an amazing day at Simply — find out what makes this happen and capitalize on it.
2. Everyone learns and improves, and individual impact, as well as the overall, is increased.

Feedback process goal: increase # of days where people return home and say it was an amazing day at work!

The 360 Feedback Process at Simply

Finally, we’re getting down to the details. But first, it’s important to note this is a working process and we will surely learn and improve over time. It’s also dynamic in the sense that it needs to adapt to the size, stage, and personal dynamics of the specific team. As our team evolves, so will this process.

Below are the principles we set, based on multiple best-practices from other companies and some academic work that was introduced to me (like this and this). It’s an easy one-pager that we share around.

1. Schedule

We felt six months cycles made sense, like in many other companies, so it’s not overly cumbersome but also not too far apart, especially in our rapidly changing environment. At first the exact schedule was at the discretion of whoever was in charge of the specific meeting, but we quickly saw that this was going to be very difficult to keep track of, so we agreed on “around June” and “around December”. Fairly standard stuff.

2. Setting In Advance

A meeting needs to be scheduled in advance with notice that it’s a “special” meeting.

• Don’t just do this during a regular weekly meeting without notice. Give people time to think on their own performance, their feedback for others, and on their own personal goals.
• Be sure to get feedback in advance from others in the team about this person.

3. Feedback: Focus on positive, forward looking and expectations

• The conversation should be a discussion on what is needed/expected, and how one can push to exceed the expectations, which is what we all need at a startup.
• How can we strengthen good qualities and “good days”. We don’t want to dwell too much on lacking qualities, but instead strengthen the great ones. For example, start with asking for a concrete example of an ‘amazing day’, what was special about that day?
• Feed-forward vs. Feed-back: Look ahead, how are things going to change/improve?

4. Self Evaluation

Your team member should start by evaluating him/herself. It’s surprising how self aware we all are, and it’s a much stronger driver for change.

“How do you think you’re doing in the team? What are your strengths / weaknesses?”

“What things do you enjoy doing the most/least?” (‘least’ helps to flag potential issues)

5. 360 Approach

This is as much an opportunity to get feedback as it is to give feedback. This is key to our process.

• Hear people out, don’t be defensive, don’t cut them in the middle, share team feedback as well
• Ask about other team members (including the CEO of course)

6. Set Goals Together

• Goals should focus on impact to the company and self development
• Evaluate progress in goals at next meetings together
• Write these down!!! Create a shared doc where you document the goals so you can look at them again in the future conversations

7. Pass It On: Send to the CEO

• Key insights/feedback points (where relevant and not private)
• Goals that were set

As a side note, it’s important to be dynamic and adaptive. Before starting the process, we discussed it openly in company meetings and in personal ones, and I had another round of meetings during and after the fact to get feedback on the process itself. These retrospective meetings proved very useful in improving how we do these meetings in the future and also gave me a good sense that the positive impact of the process was worth the work we put into it.

Some Results

Highly effective, otherwise I wouldn’t have written about it… :)

In more detail, we solved multiple issues with these meetings, pushing forward team members (including myself and other founders), setting new expectations and goals after discovering none were explicitly set before, flagging problematic areas to be solved and allowing for much needed venting. Both inner-team relations improved, as well as overall sentiment.

Much of this process was developed with my team at Simply (shout out to Nadia Hitman), integrating multiple conversations with other startup CEOs, and with the CEO of the Israeli HR Association, Dr. Shlomit Kaminka, who happens to be my Mom (thanks Ma!). God willing, we plan on writing together about other (hopefully) relevant HR process adaptations for the startup scene.

I hope this was helpful. Please feel free to send me any suggestions or insights.

Hacking Performance Review Meetings in a Startup was originally published in Simply on Medium, where people are continuing the conversation by highlighting and responding to this story.

As we just crossed 1,000 votes on Product Hunt, I figured it made sense to share a little of the crazy day we had when we launched. First, please note this is not a tutorial on Product Hunt. It’s my own humble recollection of our launch day that led to being #1 on Sep 2nd, 2015 for our Simply Piano app (and #3 overall for products from Israel e-v-e-r!) coupled with some stats (at the bottom) and a few tips I hope you might find useful. Second, while it may seem otherwise below, I actually didn’t do a lot. The entire Simply team was super active before and during that day, led by the mastermind Nadia Hitman. This is also a great opportunity for a shout out to Ben Tossell, Erik Torenberg and the entire PH team for their help, feedback and support. Thanks!

The day actually didn’t start crazy at all. Knowing that I was going to pull an all-nighter at the office, I had a nice and relaxing breakfast with my wife. You know, work-life balance and all that. Can’t recall what we had, but whatever it was, it wasn’t enough.

Tip 1: Eat/rest well before starting your launch

Being in Israel at the time, I had the luxury of getting into the office at 12am valley time (10am Israel time), just as a new PH day rises over the bay area. The plan was simple: Ben Lang, an amazing entrepreneur and a big supporter, was going to hunt our newly released app, Simply Piano. Alas, I found out Ben was in fact in meetings that morning and could only post later on. My disproportional frustration (a repeating sensation, as you’ll see below) was quickly replaced by relief as we discovered Simply Piano apparently hasn’t rolled out on the Apple servers yet, and wasn’t even available in most App Stores. And so, we waited. (Great save, Ben!)

Products started stacking up on PH, some of them getting surprising traction considering it’s now very late at night in all the places that matter for PH. One of these quickly came to our attention — Gimp Online. I know and love Gimp. An online version of it is super cool, especially for the PH bunch; heck, I voted for it. Unsurprisingly, it shot up to the top of the list very quickly.

Tip 2: Check if a massive product was hunted before posting your own

1am: We decided to pause everything. I tried getting Ben on the line to get his feedback and began a relentless (disproportional…) pursuit of my key investor and mentor, Eden Shochat, for his take on things.

1:45am: As this was happening, I suddenly remembered that a good friend who was trekking somewhere in Albania had set a buffered FB post telling her many many friends about our new app. Her post was going live in 45 minutes while our entire campaign was on hold. What drama! So naturally I did the only sensible thing and tried to get into her account. I failed.

In a moment of desperation, I convinced myself the password was going to be her parent’s home number. It was a pathetic and miserable attempt. Her post went live to my dismay, but was soon deleted (little FB dwarfs?).

Tip 3: Keep your eye on the ball, don’t waste time on silly things

2:30am: After much debate, and despite the strong competitors of the day, we decided the launch is a go. The bottom line was that we preferred to continue and avoid a potential tech behemoth on a different day.

3:20am: The plan was to get some of our supporters (who are awake) to check us out, with the hopes that our app will get to the top of the page before everyone wakes up in the US. That proved to be a solid plan. The outreach was organized in a large shared doc and included friends, family, colleagues, some power users, relevant FB groups we were active on and more, all carefully collected by the entire team a week before the launch. We also had our own email lists of close to a million users, which we ended up not using so as not to spam anyone.

We pulled in a bunch of electricity cords and had all the team work from the conference room (aka war room) to tell their friends about our new app. That is, while eating cupcakes and popping some balloons to celebrate the day.

Tip 4: Have fun

3:40am: The internet broke down. I never seem to shake off the surprise whenever this happens in a country full of engineers and hackers. Hotspots emerged all over the office like mushrooms after the rain, thank god for that.

6am: Our own community proved itself and people loved the new app. On PH we quickly reached first spot. Shortly after, I had to step out for a pre-scheduled interview at a NY radio station for a morning tech show. I love going on interviews where you get cut off mid-sentence for traffic reports... At one of these breaks the host thanked me, so I hung up and returned to the war room only to find multiple messages everywhere (SMS, WeChat, WhatsApp, email, Messenger) from my friend in London desperately trying to reach me. Apparently the interview was still taking place and the host was buying time while they were trying to reach me, or as my friend put it: “I can hear the host sweat over the radio”…

At 10am, 8pm Israel time, our amazing investors at Aleph surprised us with pizza in preparation for an all-nighter.

Yuval Kaminka on Twitter

How many times are you allowed to reheat your pizza? #launchday #startuplife w @flatgirl78 pic.twitter.com/pt3aBDD940

At that point, while answering comments and questions obsessively, I started writing people to check us out knowing that we’ll likely remain on top (knock on wood). The goal now was different - get people I admire, especially high-level supporters, to notice how well we’re doing, as opposed to hoping for more up-votes. This led to my biggest take on the Product Hunt launch.

Tip 5 : The outreach itself is just as important as the PH post

Consider an A-level article written about your company or product (thankfully we’ve had some of those) that you and some of your team might share on social networks. Now compare this to 24 hours where all of your team is genuinely obsessed with sharing with the world your great product, the PH effort, and the amazing #1 outcome. The impact this had on our exposure in the ecosystem, and for team fun, was much greater than what I had hoped for (and much more than any single PR effort). I definitely didn’t see this coming.

Tip 6: Get your team involved in the outreach

Impact

Finally, some stats. For a consumer product like ours, the goal was never #downloads or business leads. In fact, the overall usage you get is dwarfed by a single day of getting Apple love, but the exposure among industry leaders, experts and power users is, well, priceless.

Immediately following the launch we had 3,972 uniques to the PH landing page, about a quarter ended up downloading the app. In addition, we got 100+ visits to the careers page and dozens of relevant business leads, some of which have already materialized into (cool) collaborations. The PH effort also contributed to our PR, leading to cool articles on NYTimes, Lifehacker and Gizmodo, among others. All in all, we had 200,000 downloads in the first 4 weeks.

My 18-hour work day was naturally dominated by the various communication channels. I wrote dozens of posts, tweets and comments, and over 100 emails that day. I was also surprised by how much of my day went into the PH site itself. Replying to comments is the easy explanation, but I strongly suspect refreshing the page took just as much time, if not more… I was also embarrassed to find out that my internet speed tests and my inexcusable attempts to alter my friend’s future FB post took a measurable chunk out of my day as well :)

That’s it for now. For any questions, tips, ideas or suggestions please write me at yuval (at) hellosimply (dot) com or tweet me @yuvalkaminka.

Chronicles of launching a #1 product on Product Hunt was originally published in Simply on Medium, where people are continuing the conversation by highlighting and responding to this story.